We use cookies to customise content for your subscription and for analytics.If you continue to browse Lexology, we will assume that you are happy to receive all our cookies. For further information please read our Cookie Policy.

Everything But the Kitchen Sink: Leading French Kitchen Installer Fined

On November 24, 2016 the French Competition Authority (“FCA”) imposed a € 400,000 fine on a leading group of French professional kitchen equipment installers (le Groupement des Installateurs Français - ”GIF”), for having implemented since 1994 a horizontal agreement among its 80 members aiming at a territorial market division in breach of Article L. 420-1 of the French Commercial Code. The fine imposed on GIF was accompanied by an injunction ordering the group to remove the clauses of its internal rules, which were mandatory for the members of the group, as these were deemed anti-competitive.

Since 1994, the GIF internal rules attributed to each of the members of the group, a limited geographic area for their activity, while retaining freedom of activity in non-affected "free" sectors. This organization, combined with the fact that adherents were obliged to repay a part of their profit when they intervened outside their sector, was found by the FCA to imply that adherents should refrain from selling on the sectors of others without prior agreement.

This practice was held to be prohibited by Article L 420-1 of the Commercial Code, which provides (translation):

“Agreements and concerted practices, which aim at or may have the effect of preventing, restricting or distorting competition on a market are prohibited, even directly or indirectly through a group company located outside France, in particular when they tend to:

(1) restrict market access or the free exercise of competition by other undertakings, (2) hinder the setting of prices by free market forces by artificially promoting their increase or decrease, or (3) limit or control production, outlets, investments or technical progress, or (4) allocate markets or supply sources” (emphasis added).

In its decision of November 24, the FCA cited the recent case law of the European Union and in particular the Toshiba judgment of 20 January 2016, which considered that a territorial distribution of the market is presumed to constitute a restriction of competition by object when the operators among whom this distribution is organized are at least potential competitors.

Thus, the provisions of the GIF internal rules organizing a sectorization of the activity of its members by discouraging them from providing services in areas allocated to others was deemed by the FCA to be intended to reduce competition among the members of the group.